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Abbott and Co must make honest call on budget

Michael Gordon

Julia Gillard will never be a role model for Tony Abbott, but the Prime Minister should follow her example if, as seems likely, he introduces a deficit reduction levy in the budget on Tuesday week. He should call it what it is: a big new tax and a broken promise. And he should explain, in plain language, why he did it.

What he should not do is persist with the argument he begun to run this week, when pressed by Neil Mitchell on 3AW, and imply that only a ''permanent increase in taxation'' would be ''inconsistent with the sort of things that were said before the election''.

Gillard, of course, didn't want to call her carbon price a tax and a broken promise, and would later describe doing so as one of the biggest mistakes of her prime ministership, perhaps the biggest. But Abbott gave her no choice.

''I erred by not contesting the label 'tax' for the fixed price period of the emissions trading scheme I introduced,'' Gillard wrote after the election. ''I feared the media would end up playing constant silly word games with me, trying to get me to say the word 'tax'. I wanted to be on the substance of the policy, not playing 'gotcha'. But I made the wrong choice and, politically, it hurt me terribly.''

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When Gillard made her concession early in 2011, she was in an infinitely worse position politically than Abbott is now. She was presiding over a hung Parliament, behind in the polls, and being pursued relentlessly by one of the most effective opposition leaders in history.

A month earlier, when Gillard introduced a temporary levy to help Queensland recover from the floods, public opinion had supported the move but Abbott had savaged it as yet another ''great big new tax''. ''It seems the Prime Minister is going to call this a 'mateship tax', but mates help each other – they don't tax each other,'' he quipped.

That attack makes it all the more difficult for Abbott to defend the imposition of a deficit levy in this budget, especially after all the talk of no surprises, no excuses and no new taxes or tax increases.

The double challenge, if he proceeds with it, is to explain why it is necessary and why he was so emphatic in all those pre-election declarations when little, in reality, has changed but the increasingly alarmist tone of Coalition rhetoric.

This week was an opportunity to begin the task, but it was an opportunity fluffed. Rather than prepare the electorate to share in the heavy lifting, there were mixed messages; a damaging leak on the size of the levy (not least because it was inaccurate); an inelegant partial retreat on Abbott’s ''signature'' paid parental leave policy; ill-discipline from Coalition MPs (and ministers); and the potpourri of pain that is the Commission of Audit's report.

Senior Nationals minister Barnaby Joyce's lack of enthusiasm for Abbott's parental leave scheme was apparent when he predicted it would be blocked in the Parliament. ''So that's why I'm not losing sleep at night talking about something that I can't see its passage through the Senate at this time,'' Joyce said.

Even when it came to responding to the Commission of Audit's 86 recommendations, there were contradictory statements from Finance Minister Mathias Cormann and Treasurer Joe Hockey.

Both put the case for a levy in measured terms, suggesting it was the only way to ensure the well-off shared in a budget repair task which could not be completed through structural savings that would begin modestly and build up over time. But this just invited the question: why, before the election, did you commit to getting the budget under control without tax increases?

When the issue of promises was put to Hockey, the exasperated Treasurer replied: ''Please, this idea, somehow, that everything that we had ever said is going to be held against what has moved on us because the previous government basically misled the Australian people about the state of the budget, is kind of ridiculous.'' Really?

He then asserted: ''However, we are keeping our promises, we are keeping our solemn promises. Now that means that some of the initiatives that we have to roll out will occur after the next election, so that we can get a new mandate, but we can't have a do-nothing budget and we will not have a do-nothing budget.''

It had echoes of John Howard's 1996 declaration that the Coalition would honour its ''core'' commitments – but with one key difference. Back then, Howard was crystal clear in identifying the promises he intended to keep in a budget that was generally accepted as hard but fair.

Abbott will struggle to differentiate between his ''solemn'' and not-so-solemn commitments for the simple reason that he went so hard against Gillard for breaking her promises and put such store in keeping his. Under-promising and over-delivering is his mantra. As he told me earlier this year: ''This is going to be the year of keeping commitments. That's going to be good for everyone. It will mean that we will have a stronger economy, and it will also start to restore the faith in our polity, which was regrettably undermined and diminished over the past six years.''

Another key difference between 1996 and now is that the Howard government released its commission of audit, complete with a swathe of radical proposals to overhaul welfare and slash funding for health, education and age pensions, two months before the budget.

Then treasurer Peter Costello noted that at the time that it was not a report of the government, but a report to the government, and made it plain that where recommendations conflicted with election commitments, the commitments would stand.

Hockey made the same opening point on Thursday, after his Commission of Audit revisited much of the same territory but proposed much more radical changes, including the dismantling of Medicare as we know it. But he declined to rule recommendations in or out. For what purpose?

If the aim is to start a national debate about what constitutes an entitlement and the sort of country Australia aspires to be for the next generation, Abbott and Co have made a clumsy start. If the purpose is to fan anxiety so that a tough budget will be received with a sense of relief, it is a tactic that smacks of old politics, not the kind we were promised before the election.

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